A friend of ours is in deep financial (medical- wife died of cancer) trouble. Many friends have pooled money (cash and checks made to cash).
What is the best way to give it?
We are considering Cashier's check, Visa gift card, etc. Keep in mind, he is very proud, and we're afraid that he will not cash a pile of checks. (Also, avoiding tax implications would be nice.)posted by antipode12 to Work & Money (29 answers total) 1 user marked this as a favorite

Visa gift cards are generally a bad way to go, given the transaction fees to purchase them.

Is this a US question? If so, the IRS guide to determining whether there are gift tax implications is here. This is not legal or tax advice; I am not your lawyer.posted by Admiral Haddock at 11:55 AM on February 7, 2010

Avoiding tax implications depends on your location.posted by dfriedman at 11:57 AM on February 7, 2010

A regular check should do it. The main reason to use a cashier's check is when you're giving it to someone who might not believe that you have the money. Holds should be shorter too, but it hardly seems worth the trouble unless he needs the money immediately, in which case you should use a wire transfer instead, anyway.

If he won't accept the money now, you might put it in a savings account in trust for him. Or it might make sense for him to declare bankruptcy now and for you to help in in non-monetary ways.posted by grouse at 12:02 PM on February 7, 2010

I can't say about tax, but I say an envelope of cash is the way to go. Aside from trying to give it back, he can't really refuse it, and he could refuse to use it but eventually he'd go back on that (very quietly, likely).

Sure, if it's thousands of dollars, the bank teller may look at him weirdly, but he doesn't have to put it all in the bank (or all at once). If you give it in a mixture of bills, he can just use it for day to day spending.posted by R a c h e l at 12:04 PM on February 7, 2010

When a very dear friend was very ill with cancer and in dire financial straits, someone she knew simply handed her a large envelope filled with cash - a very considerable amount of cash - and said "We will never speak of this again."

And honestly, that was that. As far as I know, no thanks was ever given, no repayment was expected, and no tax was paid. Fini.posted by DarlingBri at 12:05 PM on February 7, 2010 [29 favorites]

If you have a check from him, then you know his account number and can make a deposit directly into his account. Then the money is just there for him to spend.

I set up a simple word document to print "for deposit only to the account of xyz acct #123456 to print centered at the top of the back of each check - like a deposit stamp. that way I can deposit checks made out to my husband without forging his signature. Something similar would work her.

Keep track of each donor and how much they gave. IANAL but in the US I think as long as each person's gift is under $11,000 there is no gift tax involved. A large deposit would probably be reported but it shouldn't cause problems if there is a good explanation.

The one thing to think about is if the money is in his account with his name, it affect bankrupcy procedures or get claimed by someone he is owing money to or otherwise get in the way of negotiating reduced payments. On the other hand, if the idea that he will immediately turn around and use it pay off debts then it less of a concern.posted by metahawk at 12:13 PM on February 7, 2010

Second thought - a fat envelope of cash gives him the most flexibility.posted by metahawk at 12:20 PM on February 7, 2010

How can we know the tax implications if you don't say where you live or even what country?

Assuming you're in the USA, there are no tax implications unless tax implications unless individuals are giving over like $13000. Are you guys giving more than $13,000 per person? If not, don't worry about it.

I think as long as each person's gift is under $11,000 there is no gift tax involved

The exemption goes up with inflation.posted by Justinian at 12:26 PM on February 7, 2010

Sure, if it's thousands of dollars, the bank teller may look at him weirdly, but he doesn't have to put it all in the bank (or all at once).

Yeah, you want to be careful with that. Timing deposits and such to avoid scrutiny is called "structuring" and is illegal. That's how they got Eliot Spitzer I think?posted by Justinian at 12:30 PM on February 7, 2010 [1 favorite]

The irony is that Spitzer was alerted to this suspicious activity by the FBI because they initially thought that someone was impersonating him.posted by dfriedman at 12:37 PM on February 7, 2010

I know jack squat about tax implications, but we recently helped out a coworker who had a major personal tragedy and gave cash, and it was much appreciated. Cash is nice because it's the most flexible to use, everyone accepts it, there's no need to go to a middle-man to cash it, and it also eliminates the awkwardness involved in cashing personal checks.posted by dumbledore69 at 12:49 PM on February 7, 2010

Thanks for the advice. We are in NY (US). The tax concern was for HIM, not US. We'll probably give him over $10000, and the thought was that it would have to be declared for his taxes.

Also, envelope of cash won't work because there is a large mix of cash and personal checks.

My understanding is that a Visa gift card only has a fee for its purchase ($10).posted by antipode12 at 1:16 PM on February 7, 2010

Based on my own experience, I would advise against the Visa gift card. I received a couple of them as gifts over the last holiday season, and found it challenging to use partially-redeemed cards. On several occasions I was told that I needed to know the exact amount left on the card before using it (info here). It was a total PITA and caused me to toss the cards before they were fully used up.posted by kayzie at 1:38 PM on February 7, 2010

On the pride front, tell him you (all of you) wanted to do it to honour his wife and all he did to care for herposted by Bet Glenn at 1:43 PM on February 7, 2010

General rule - Gifts are not taxed to the gift recipient.

This might be weird, but could you just deposit it in his bank account? In my experience, for deposits the bank will let you just deposit money in anyone's account (I've had friends/siblings who owe me money just go to my bank and say I need to deposit this in "First Name Last Name's" account) and it works with no issues. Any deposit over I think $10K has to be reported by the bank (but really, it's not a big deal as long as what you're doing is legit), and I may be wrong but I think that reporting requirement only applies as to cash that you're depositing.posted by melissasaurus at 1:43 PM on February 7, 2010

Another thought - if the idea is to help with his medical expenses, the money can be used to pay them directly if he does not want to accept it.

The reporting requirement applies to any transaction over $10,000, even by check. But it is just a reporting requirement. If what you are doing is legal there is no reason for concern.posted by megatherium at 1:56 PM on February 7, 2010

>Gifts of up to $10,000 per person are not generally taxable.

Note that the link is to a 2001 IRS publication. As stated above, the figure for each donor is now $13,000 per donee per year. Gifts under that amount do not have to be reported at all. Gifts over that amount (by one donor) have to have a gift tax return filed but still do not result in a tax until the total reportable amount (to all recipients who are not charities) given by one donor in his lifetime exceeds a million dollars.

And gifts of any amount, even a billion dollars, are not taxable to the recipient. It is the donor who pays gift tax when it is payable.posted by megatherium at 2:03 PM on February 7, 2010 [2 favorites]

Give cash. You cash the checks made out to cash and give 100% genuine us minted cash. If it is more than $10,000, leave a note inside to deposit in two different transactions with each being less than $10,000. Tell the person it is from friends who wish to be anonymous and who prefer not to be thanked. Move on.posted by JohnnyGunn at 2:31 PM on February 7, 2010

Also, envelope of cash won't work because there is a large mix of cash and personal checks.

Put the cash you have into an envelope. Take the checks made to cash, cash them, and add the cash to the envelope. Take the checks made out to your friend and add them to the envelope.

Your friend is still going to end up with the checks made out to them, since there's nothing else you can do with them. I don't think you can pay your mortgage with a VISA gift card, so that doesn't seem so great to me.posted by DarlingBri at 2:34 PM on February 7, 2010 [1 favorite]

Yeah please don't do visa gift cards; they are a fucking pain in the ass to use and i really don't think you can use them to pay any kind of bill, let alone use them in many many many large retail stores.

Whether or not you are SUPPOSED to be able to use them is beside the point; in practice they are a pretty shitty gift in the opinion of this USian.posted by shownomercy at 2:48 PM on February 7, 2010

Another vote against gift cards, just for the simple fact that you can't use them at the gas pump.posted by desjardins at 3:01 PM on February 7, 2010

The tax concern was for HIM, not US. We'll probably give him over $10000, and the thought was that it would have to be declared for his taxes.

There are no tax concerns for him. It is the person who gives the gift who is responsible for any taxes. He doesn't need to be concerned about it, you guys do.posted by Justinian at 4:04 PM on February 7, 2010

Oh, and in case it isn't clear, just give the guy a bunch of cash. You say we will probably give over $10,000. Remember that the exemption is $13,000 PER PERSON. That is, per giver. So, again, unless you have like 10 people giving a total of over $130,000 there shouldn't be any tax implications.

Anoter thing, even if an individual gives over $13,000 in tax you don't have to pay taxes on it. You just have to declare it against your lifetime exemption which is, what, a million dollars a person?

Bottom line: It is virtually certain that nobody is going to have to pay any taxes on this. It is very likely that no one is even going to have to declare it on their taxes. And, even if someone does, the recipient doesn't have to worry about it since it isn't him.

Note: I am not an accountant or whatever. But I'm right.posted by Justinian at 4:09 PM on February 7, 2010

Oh, another point. If you guys were to, say, pay the medical expenses directly then it would not be taxable or reportable regardless of the amount. You could pay a $500,000 medical bill and there would be no tax implications so long as you paid the bill directly. You'd want to save the receipt in such a case, obviously.

Uh, sorry for the repeat postings but it seems relevant.posted by Justinian at 4:12 PM on February 7, 2010

One more point against the gift cards. Some of them expire; some lose some of their monetary value after a certain amount of time; and some have a fee per transaction (something like $3.50) which really eats up the cash available on a card with a large monetary value intended for multiple transactions. I can personally attest to the $3.50/per transaction fee as I got a small gift card recently and that was in the fine print.posted by kaybdc at 6:15 PM on February 7, 2010

Oh and just to specify, the gift card that I received with the $3.50 per transaction fee was a Visa gift card. I'm not sure if there are ones that you can purchase from a bank, as opposed to the ones in the gift card kiosk at the local grocery store, have fewer fees. It's a great thing that you and your friends are doing. I'm sure you'll find something that will work.posted by kaybdc at 6:23 PM on February 7, 2010

Nthing to convert as much to cash as possible and then either deposit the checks into his account or just include them in the envelope with the cash. Gift cards are a pain in the ass.posted by desuetude at 8:05 PM on February 7, 2010

I appreciate all the advice.

Not that I'm married to any one idea, but the Visa gift card from my bank costs $10 and has NO per-transaction fee. It does begin to deduct $$ after 1 year.

It CAN be used at all POS locations, if it is registered online first.
It CAN be used to pay medical bills (and most other bills) online or through the mail.
You do NOT need to know the amount on the card. But like any gift card, if you do not have enough on it, you pay the balance in cash.

HOWEVER -- as I discovered -- it has a maximum limit of $500. So I'd need a lot of them.

As for the suggestions to deposit it to his account, how would I get his bank and account #?

Thanks for the tax info. That helps a lot to know.

Looks like we will go the route of cashing the checks, and then getting a bank check in his name for the amount.posted by antipode12 at 1:32 PM on February 8, 2010

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